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From Lever to Club?: conditionality in the European Union during the financial crisis

Jacoby, Wade and Hopkin, Jonathan (2019) From Lever to Club?: conditionality in the European Union during the financial crisis. Journal of European Public Policy. ISSN 1350-1763 (In Press)

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Abstract

How did the European Union come to develop so many instruments of conditionality in its response to the Eurozone debt crisis, despite the well documented limitations of such measures in other contexts? This article argues that major EU actors—Council, Commission, and Central Bank—were influenced by their own recent and positive experiences with conditionality, especially in the EU’s enlargement in the early 2000s. However, as we also show, despite the promise of conditional instruments in these two earlier episodes, further EU reliance on conditional policies has not brought the positive outcomes the main European institutions—here the Council, Commission, and ECB— had hoped for. As EU institutions turned to harder and harder forms of conditionality in the Euro crisis, they relearned many of the negative lessons of conditionality familiar from the broader literature and ultimately had to concede that the apparent success of its conditionality tools in the earlier enlargement and global financial crisis (GFC) phases was exceptional. The article documents the evolution of conditionality between these two periods, showing how the conditionality instruments used by the EU changed over time, beginning as a “lever” to assist the accession of candidate states in the enlargement period, and evolving into a “club” used to impose macroeconomic discipline in the aftermath of the GFC of the late 2000s. It shows why this preferred approach to the Euro crisis failed and was ultimately downgraded as Eurozone policy shifted in favour of monetary measures in which conditionality played only a marginal role.

Item Type: Article
Divisions: Government
Subjects: H Social Sciences > HG Finance
Date Deposited: 18 Nov 2019 16:42
Last Modified: 08 Dec 2019 00:32
URI: http://eprints.lse.ac.uk/id/eprint/102563

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